When starting a business in Ohio, there are many decisions that you must make. One of the most important initial steps that you would be wise to take is to establish how your business will run. Limited liability companies need operating agreements to outline the function and the rights of each owner.
If you are starting a business and plan to structure your business as an LLC, you may need an operating agreement. Drafting this agreement can be a complex process, and you would be wise to consult with an attorney as you plan your business operations, as well as your rights and responsibilities.
The details of your operating agreement
There are several benefits to having a strong operating agreement. Some of these could include:
- Protect your limited personal liability
- Shield you from complications with other owners of your business
- Protect your personal assets in the event that the court seeks to fulfill financial obligations to a creditor
As you are drafting your operating agreement, there are multiple factors that you would be wise to implement, including the following:
- Rules for meetings and procedures for voting
- A breakdown of the ownership percentage for each owner
- Plan for the distribution of profits and losses
- Management plan for your business
- Voting rights for members
- Rules for a potential buyout or sale of the business
It is possible to also include in your operating agreement an outline of the appropriate process in case of a transfer of ownership. Whether you retire, sell or simply transfer your share of the ownership of the business to another owner, your operating agreement can make this process smoother and easier for all parties filed.
When you are starting a business, you would be wise to lay a foundation that allows for the protection of your current and future interests. A strong, thoughtful operating agreement can serve as a cushion for your personal assets and liability, as well as the prosperity of your business.
Protecting yourself as a business owner
By choosing a LLC as the legal structure for your business, you are protecting yourself from a certain amount of legal liability. Yet, having an operating agreement in place is another important step to ensure that you do not face unnecessary complications regarding the governing and operations of your business.
When navigating the start-up process, you would be wise to take the necessary steps to configure the operations of your business in a way that minimizes risk and sets you up for continued success and prosperity.